Need to reduce cross-subsidisation of passenger fares

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The Railway Budget 2016 puts strong focus on passenger amenities and facilities. It is designed to cater to the needs of almost every member of the traveling public, be it women, physically challenged persons or senior citizens.

The good thing is that there is no increase in passenger fare or freight rate. The minister has targeted to increase revenue by moving more passengers and carrying additional freight.

In the coming financial year, incremental freight traffic of 50 million is targeted. On growing economic activities, it is achievable. Besides, Indian Railways has planned to expand its freight basket targeting automobile and other sectors.

Nearly 23 million people travel by railways every day and they need better facilities. The Railway Budget has proposed a slew of initiatives to make customer experience better. Four new types of trains are planned to be introduced, Humsafar Express, Tejas, Uday Express and Antyodaya Express, to cater to various categories of travelers.

This year's Railway Budget seems to be a continuation of the last year’s budget, as capacity expansion and passenger facilities remain top priorities. Over the years, railway infrastructure has got strained. The investment made in the sector remained very low compared to what was required.

As a result, hundreds of projects kept languishing. But now there is increased focus on capacity building. Innovative ways of financing are being looked at. The railways has secured Rs 1,50,000 crore from LIC, which it would receive over the next five years.

Funding is no longer an issue for bankable railway projects. Railways needs to identify remunerative projects that could start generating revenues immediately after commissioning so that debt servicing could be done.

The budget has proposed to take up three more freight corridors-- north-south connecting Delhi to Chennai, east-west connecting Kharagpur to Mumbai and east coast connecting Kharagpur to Vijayawada. The two freight corridors are already progressing well. All these infrastructure projects are set to help railways in a big way to get the freight traffic it lost to other modes of transport.

In another initiative, the minister wants to make the infrastructure suitable for carrying 25-tonne axle load wagons. As has been announced, 10-20 per cent freight loading is expected to happen through these high-capacity wagons. This will bring down freight movement cost and therefore help in saving significantly. Gradually, more goods would be carried through these wagons, which would enhance railways' competitiveness with road sector with which it is in direct competition.

Over the years, the Indian Railways' share in goods movement has come down. From virtual monopoly in the 1980s, it has come down to 36 per cent.

I am quite hopeful that the DFC and infrastructure for 25-axle load wagons would be completed in a time-bound manner. Once this happens, railways would be well on its track to re-capture its lost market share.

Further, the railway needs to reduce cross-subsidisation of passenger fares. It is a tough decision, but it has to be taken in the interest of the railways. People are very emotionally attached to it and do not want to touch it.

On restructuring of the functioning of the railway board, the budget has talked of reorganising it on business lines. It is presumed that restructuring at the director's level across the directorates has been thought of.

For example, the director of locomotives could be one person instead of two directors at electrical and mechanical. The marketing director will only concern himself with marketing and the director (passenger movement) will look after movement issues. More clarity is needed on this as in the budget speech it was not very clearly spelt out.

Going forward, the tendering process for various works are set to get smoother. Now there is e-tendering. It was done earlier as well but some areas were left out, which are being covered now. In days to come the entire process would be online, which would bring more transparency. Overall, the Rail Budget is very balanced and has clarity.

(Arunendra Kumar is former chairman, Railway Board)

(As told to Nirbhay Kumar)


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